The Local Operations Manager for the Internal Revenue Service Must

question 134

Multiple Choice

The local operations manager for the Internal Revenue Service must decide whether to hire one, two, or three temporary tax examiners for the upcoming tax season. She estimates that net revenues (in thousands of dollars) will vary with how well taxpayers comply with the new tax code just passed by Congress, as follows:

If she feels the chances of low, medium, and high compliance are 20 percent, 30 percent, and 50 percent respectively, what are the expected net revenues for the number of assistants she will decide to hire?

• A)$26,000
• B)$46,000
• C)$48,000
• D)$50,000
• E)$76,000

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Definitions:

Short-Run Phillips

A concept in economics that illustrates an inverse relationship between the rate of unemployment and the rate of inflation over the short term.

Expansionary Monetary

Refers to a policy aimed at increasing the money supply in order to stimulate economic activity, typically adopted by a central bank to foster economic growth.

Natural Rate

The natural rate often refers to the natural rate of unemployment, which is the level of unemployment consistent with sustainable economic growth, not accelerated by inflation.